Insights into 2025 AI and API challenges in financial services

In the rapidly evolving financial services industry, digital innovation stands as a key competitive advantage. As advancements in technology progress, financial institutions face relentless pressure to continuously adapt and innovate to satisfy increasing customer expectations and stay ahead of the competition.

The 2024 F5 State of Application Strategy: Financial Services Edition (SOAS-FS) report offers valuable insight into how these changes were reshaping the sector last year and what may lie directly ahead.

This article focuses on exploring the critical challenges and solutions surrounding artificial intelligence (AI) in financial services and banking-specific application programming interface (API) deployment. I’ll draw on key findings from this report, which is based on survey results from global financial services IT managers and practitioners.

The rise and expansion of AI in financial services

AI technologies are transforming the way financial services operate, with the SOAS-FSI revealing over 80% of organizations integrating AI into their systems to some degree. This extensive adoption is not surprising given AI’s potential to boost efficiency, enhance decision-making and provide more personalized experiences to account holders.

However, the same report highlights a critical concern around the impact of performance across all aspects of AI models. Poor performing AI models can lead to latency and impact the consumer experience—a concern that even ranked higher than the costs concerns associated with AI implementation in the report.

As organizations strive to mitigate the risks associated with underperforming AI models, the report aptly highlights a notable trend: the rise of AIOps. This approach has emerged as the second most significant priority for decision-makers in the financial services sector. The growing reliance on telemetry for automation is propelling this trend, as financial services organizations seek to streamline operations and reduce human error.

As AI technology continues to mature, those who invest in building a flexible IT infrastructure capable of rapidly supporting new technologies will be best positioned to capitalize on innovation, driving growth and improving service offerings.

API security takes center stage in financial services

APIs are increasingly vital in the financial services industry, facilitating smooth transactions and efficient data exchanges. This has resulted in the rapid expansion of APIs, which are central to the sector’s digital transformation goals, enabling account holders to conduct digital transactions from anywhere. Consequently, the importance of robust API security strategies cannot be overstated. The new vulnerabilities associated with API sprawl can be mitigated by more advanced API security protocols, which better safeguard sensitive data and maintain consumer trust.

Consequently, improving API security has emerged as a top priority, prompting almost all organizations to implement or enhance their API protection strategies. On average, financial services manage approximately 601 APIs according to the SOAS-FS, a figure that is steadily growing as app modernization efforts expand and AI deployments accelerate. Of course, this API number is in the thousands for enterprise financial services organizations, which adds even more complexity — and this is before we even consider how many more API endpoints are associated with these APIs.

The report also reveals that 45% of financial organizations are adopting API discovery capabilities, crucial for maintaining control over their digital ecosystems where zombie APIs and/or shadow

APIs often remain hidden and exposed in many institutions. As a side, finding API security solutions that both discover and automatically protect these APIs is highly recommended to minimize the amount of time these vulnerabilities exist unprotected. This consideration is particularly crucial in the era of open finance.

Hybrid multi-cloud implementation poised to dominate in 2025

The implementation of hybrid multicloud environments is reshaping the operational landscape of financial services, delivering improved flexibility and resilience. These environments allow organizations to choose the best cloud platforms for specific tasks, optimizing performance and cost-efficiency. Despite these benefits, the report identifies significant challenges, with 95% of financial services organizations struggling with issues related to multicloud deployments.

Management complexities and security concerns top the list of challenges according to the SOAS-FS, requiring institutions to implement comprehensive strategies to maintain a secure and efficient multicloud infrastructure. Flexibility is a key consideration, as 66% of respondents emphasize the importance of selecting cost-effective solutions that meet their requirements. Interestingly, while business continuity is a priority for global respondents, financial services decision-makers are particularly drawn to the AI workload advantages offered by multicloud configurations.

The expansion of hybrid multicloud environments highlights the need for expertise in managing diverse cloud platforms while maintaining high security standards. Financial institutions must invest in training and resources to navigate this complex landscape effectively, ensuring that they can leverage the full potential of multicloud technologies, while mitigating the associated cybersecurity risks.

Charting the course ahead

The critical role of digital innovation in shaping the future of financial services is underlined by the insights from the F5 2024 State of Application Strategy: Financial Services Edition report. As AI and API technologies become more integrated into the industry’s fabric, organizations must develop agile strategies to address the challenges they present.

By focusing on building flexible IT infrastructures, prioritizing API security and embracing the benefits of hybrid multicloud environments, financial services can enhance their offerings and maintain a competitive edge.

Chad Davis is Senior Solutions Marketing Manager at F5.